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critical reasoning query
by shivani tiwari - Saturday, 7 November 2009, 02:02 PM

question:Insurance company X is considering issuing a new policy to cover services required by elderly people who suffer from disease that afflict the elderly.premiums for the policy must be low enough to attract the customers .therefore company X is concerned that the income from the policies would not be sufficient to pay for the claims that would be made .

which of the following strategies would be most likely to minimize company X's losses on the policies ?

a.attracting middle aged customers to submit claims for benefits for many years .

b. insuring only those individuals who did not suffer from diseases as children

c.including a greater number of services in the policy than are included in other policies of lower cost

d.insuring only those individuals who are wealthy enough to pay for the medical services.

THE ANSWER GIVEN IS OPTION D but option c satisfies the question better .can anyone explain which option is right and why ?

Re: critical reasoning query
by Bishweshwar Pradhan - Saturday, 7 November 2009, 07:17 PM

a & b can be safely eliminated.

"d" doesn't satisfy with sound reasoning......even if they are wealthy, the premium amount would be the same & this doesn't increase the amount paid as premium for the policy.

Re: critical reasoning query
by sushmitaTG TEAM - Friday, 8 November 2013, 01:21 PM
The answer is D.
Option A can be eliminated because 'claims' are not related to the losses.
Option B can be eliminated because the company wants to ensure the elderly, not the children.
Option C can be eliminated because including the greater number of services in the lower cost would not minimize the losses.
Option D is correct because, if they ensure the wealthy individuals and keep the premiums low according to the wealthy people (which would be comparatively high), the company losses would be minimized.